Crop insurance: No good deed goes unpunished

When the levees broke and the floodwaters came rushing toward many Midwest towns, government officials asked me to make an enormous sacrifice.

They needed soil from my farmland to extend and build up a levee to hold back an unprecedented wall of water. If I said yes, it would save millions of dollars for businesses, homes and possibly lives in Hamburg, Iowa. But saying yes also meant centuries offertile soil would be removed from my farm, essentially ruining everything my family had worked for and guaranteeing I’d have to start over.

Sacrificing my farm was an easy decision. It was the right thing to do. And after a long conversation with my crop insurance agent, I knew that I’d at least have a chance to pick up the pieces when the waters receded.

Stepping up is nothing new for agriculture. With a rising tide of debt caused by runaway spending flooding our country, agriculture offered up cuts to its policies to help get the country back on track.

All told, more than $15 billion in spending was sacrificed, and ironically, more than $12 billion of that came from the crop insurance system that is in place to guard against things like floods. Crop insurance, which is purchased by individual farmers with some backing from the government and is serviced by efficient private companies, has become our most important risk management tool.

But like the old saying goes: No good deed goes unpunished. Despite being one of the only industries to answer the budget bell for the country’s betterment, farmers are again in cutters’ sights.

As the Farm Bill moves to the Senate floor in June, some lawmakers are planning to propose amendments that will further reduce spending and weaken the crop insurance infrastructure even more.

These agriculture opponents will deliver polished statements on C-SPAN about giant agribusinesses, and about insurance companies making too much money. They won’t mention that on top of the cuts already made to crop insurance, these new amendments could be the beginning of the end of our most important farm-saving program.

Any amendment that jeopardizes insurance participation—whether it be arbitrary caps on benefits, means testing, or new mandated environmental regulations—will harm any grower with an insurance policy in place. That’s because insurance policies, like auto insurance policies, are interlinked. Premiums paid by less risky growers helps make insurance possible for riskier producers.

Without an adequate pool of insured participants, the whole system could collapse, making it harder to secure insurance policies or to quickly collect indemnities when disaster strikes.

Not to mention, when commodity prices are strong and premiums go up, even moderate-size full-time farms could be pushed out of the insurance system by the caps Congress is considering.

For example, I farm 1,000 acres to make ends meet, and the caps being discussed would’ve hit me last year.

My insurance coverage would have been inadequate, and after losing 80percent of my crop to flooding, chances are I would not have been able to bounce back to plant in 2012. I am not getting rich from crop insurance; I am surviving because of crop insurance.

Crop insuranceDon Kraft 06/08/2012 @ 7:40pm
There is nothing to keep private insurers from offering private policies to crop producers to lay off risk of crop failure. Farmers can pay for their own insurance just like ordinary people try to afford health insurance. For many folks health insurance is unaffordable as well. A very high percentage of crop farmers resist government subsidizing health insurance but they got their nose deep in the trough for crop insurance subsidies.
If we can't offer affordable health insurance to Joe sixpack and his family we hardly need to subsidize millionaire farmers. Life is a struggle for many of us but until farmers show a little compassion for ordinary people, I will oppose any subsidizing of crop insurance.

Re: Re: Crop insurancePaul Penner 06/15/2012 @ 8:33pm
You and I go back a long ways,Don and we disagree on this issue. I don't know of any insurance company that would offer full coverage without a subsidy on a nationwide basis. It is not actuarily sound. Period. Some might offer coverage in Iowa but not in the great plains from Texas to north Dakota.
If a federal subsidy is wrong then i suggest you lobby congress to eliminate all other subsidy programs as well. We have school programs, aircraft industry programs,city and state programs communications programs....you get the idea. Which ones are you for?